what-happens-to-the-money-market-and-aggregate-demand-when-government-spending-i

Question

What happens to the money market and aggregate demand when government spending increases?

Accepted Answer

Interest rates rise, reducing investment, but aggregate demand initially increases.

Answer

Interest rates fall, increasing investment, and aggregate demand decreases.

Answer

Interest rates rise, increasing investment, and aggregate demand remains unchanged.

Answer

Interest rates remain unchanged, and aggregate demand decreases.